Week in review: the good, the bad and the uncertain

It was a week dominated by central bank meetings and more political play. The US Federal Reserve (Fed) raised its key interest rate by a further 0.25% – the second increase this year – while Donald Trump’s possible Russian links came under further scrutiny. In market news, a split over monetary policy meant that the FTSE 250 suffered its worst day since last year’s Brexit vote.

Fed hikes

US inflation eased in May while monthly retail sales posted their biggest drop in more than a year. But this didn’t stop policymakers lifting rates by another quarter point to 1.25%. Janet Yellen, chair of the Federal Reserve, stated the nation’s prospects remained bright.

Meanwhile, the Bank of England kept rates at their historic low despite a split over policy and outlook among the committee. It was an unexpectedly close call as members voted 5-3 in favour of keeping rates on hold. Markets were clearly not positioned for such a narrow majority with the FTSE 250 falling 2.1% on Thursday. The 10-year Gilt yield — a key indicator of inflation expectations — climbed from 0.95 per cent to 1.03 per cent.

Changes under way

Emmanuel Macron’s fledgling centrist party, La République En Marche, looks set to fly to an overwhelming majority in parliament after the first round of elections. Electoral victory will make France’s new president a potent force. His team will be made up of largely inexperienced political novices, but they are ambitious and will be in control with a minimum of 400 of the 577 seats available. The revolution is underway in France.

In contrast, Theresa May’s hopes of a strong and stable government are all but gone. It was another tough week for the Conservative leader as she attempted to scramble together a government. Talks with the Democratic Unionist Party looked to be moving ahead, but, at the time of writing, they have failed to deliver anything concrete.

It seems that no matter what US President Donald Trump does or says, the Russia investigation won’t go away. Despite Trump taking to Twitter to protest his innocence, a heightened sense of unease gripped the White House this week as the President is under investigation for potential obstruction of justice. Testing times lie ahead.

Not so swoosh

Nike, the Oregon-based sportswear maker, announced it will be cutting 2% of its global workforce. The move is a shift in its business model that aims to sell more products directly to consumers as it looks to reverse slowing sales growth.

It wasn’t a particularly grandiose week for Majestic Wine either. The retailer fell to a £1.5 million loss following flat sales and a failed attempt at direct marketing in the US. But despite the news, bosses are confident that a turnaround plan is already beginning to bear fruit.

And Finally…

On June 21, KFC plans to launch its Zinger chicken sandwich into space via a high-altitude solar-powered balloon known as a “stratollite,” a word combining “stratosphere” and “satellite.”

Admittedly the burger will only make it 28.5 miles above land, falling short of the 62-mile threshold to be considered the edge of space. Still, it’s one small step for a chicken sandwich, and one giant leap for fast food.

Past performance is not a guide to future results. The value of investments, and the income from them, can go down as well as up and you may get back less than the amount invested. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. We recommend that you seek financial advice prior to making an investment decision.

Please note that access to third party websites provided by hyperlinks to those sites are beyond the control of Aberdeen Asset Managers Limited (“Aberdeen”). Accordingly Aberdeen accepts no responsibility for the accuracy, completeness or legality of such third party websites or for any offers, services or products referred to therein. You will be entering and accessing such third party websites at your own risk.

Aberdeen does not warrant the accuracy, adequacy or completeness of the information and materials contained on this website and expressly disclaims liability for errors or omissions in such information and materials. Any research or analysis used in the preparation of the information has been procured by Aberdeen for its own use and may have been acted on for its own purpose. Some of the information on this website may contain projections or other forward looking statements regarding future events or future financial performance of countries, markets or companies. These statements are only predictions, opinions or estimates made on a general basis and actual events or results may differ materially. Any information and materials are strictly for information purposes only and should not be considered as an offer, or solicitation, to deal in any of the investments or funds mentioned herein and does not constitute investment research as defined under EU Directive 2003/125/EC No information on this site constitutes investment, tax, legal or any other advice, or an invitation to apply for securities in any jurisdiction where such an offer or invitation is unlawful, or in which the person making such an offer is not qualified to do so.

Neither Aberdeen nor any of its employees, associated group companies or agents has given any consideration to nor have they or any of them made any investigation of the investment objectives, financial situation or particular need of the reader, any specific person or group of persons. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the reader, any person or group of persons acting on any information, opinion or estimate contained on this website. Aberdeen reserves the right to make changes and corrections to any information on this website at any time, without notice.

Issued and approved by Aberdeen Asset Managers Limited, authorised and regulated by the Financial Conduct Authority in the United Kingdom. Member of the Aberdeen Asset Management group of companies. Registered in Scotland No. SC108419. Registered Office: 10 Queens Terrace, Aberdeen, Aberdeenshire, AB10 1YG.

More From MarketViews

Sponsored Financial Content

Aberdeen Asset Management is a global asset manager and listed on the London Stock Exchange. It is one of the top five independent asset management groups in Europe. We are based in 26 countries with 39 offices, over 750 investment professionals and around 2,720 staff overall. Our assets under management were £302.6 billion as at 31 December 2016.

More from Aberdeen Asset Management

Latest from MarketViews

Join the MarketViews Community and get the latest views from the experts on what’s happening in the markets direct to your inbox.

E-mail*

By providing your email address, you consent to receiving further information from MarketViews. You can unsubscribe at any time and all information provided is governed by our Terms & Conditions and Privacy Policy

Should be Empty:

Where to buy Investment Trusts

Polls

What is your general market sentiment for the second half of the year?